Oct 11, 2018

Potential investors be aware, stay away!


"By continuing to follow our investment strategy of strict upfront screening, disciplined underwriting, and precise execution of property level operating plans, I anticipate strong results.”

This is laughable!!!  ALL the elements are non-existent.

I invested in two student housing deals with Jide, and they drove the occupancy all the way south from 95% down to around 80%.  I only speak based on real numbers.

They have a couple properties in College Station, TX which are all under stress due to oversupply issues there.  I'm fine with the oversupply, that's kind of my fault without in-depth DD.  However, they had issues with one property where they had to dispute with the lender on how much tax escrow they need to pay.  That's OK with me too, who doesn't have some hiccups?  However, I lost all my patience after full 3 months, they still don't have an answer.  Every time I call, the reply was their accountant is working diligently on it with the lender, will have an answer next week, but to no avail.  As of the time of this review, the distribution is suspended due to low occupancy at 82%.  The asset management was “confident” they can improve the performance by putting in professionals instead of students, but within entire Q3, they can’t move even one more unit in leasing.

Another property is student housing project in Mattoon IL, south of UIUC.  The distribution has been suspended for 6 months.  This property is on the front page of their Residential Fund IV fund raising material, where they bragged about how they converted a 10-month lease into 12-month.  What they didn’t tell the investors is that the occupancy dropped to below 80%, as apparently not everyone likes it.  And of course, they blame it on lower school enrollment.  And did I mention they suffered flash flood TWICE in last 6 months?  The first time they didn’t even have insurance.  Now I am waiting to see how much insurance they will pay next year and how it will affect the expense.

In general, this is a sponsor you should avoid at all cost.  They grew very rapidly over the last 2-3 years to scale up, but lack of experience and knowledge of local market is a serious concern.  Managing various properties across regions appear to be very difficult.